MDC - Earnings call transcript Q1 2022

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Operator

Hello. Welcome to the MDC Holdings 2022 First Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today's event is being recorded. to and conference Corporate like Kimmerle, to would President Vice Controller. now turn over the Derek I Mr. Kimmerle, please go ahead.

Derek Kimmerle

quarter Thank you. the conference first to and gentlemen, call. earnings Good morning, MDC ladies Holdings and welcome XXXX

today, me Mandarich, mode. Officer. After a David Officer; At with call time, Executive the to I Larry request participants Executive conduct Chief conference Chief will at question-and-answer Mizel, question that Martin, Bob prepared question. listen-only all participants finishing have and follow-up this our a Chairman; themselves and is our Financial will this we in we On remarks, be replay. which Please limit available session, one recorded that one and for time note being are

how on access information please to mdcholdings.com. visit replay, For at the our website

his G our posted of and SEC factors information Larry forward-looking the remarks. may to use David, during strategies impact And the business, be the the cash information could expected that to over and I it statements Regulation be financial operations, are in webcast required will over achievements and that Mizel that on related with call of today. questions statements and our factors company’s G involve to different results, by non-GAAP within the that financial unknown or These of the company’s conference which condition, forth quarter results, company's first responses accompany with should implied SEC other by other turning this for contain XXXX certain Mr. and These and to also filed measures. or noted performance to the from forward-looking made the the requires Act flows, performance statements call Reform prospects set including certain turn opening Form noted now, meaning slides. be materially actual statements. uncertainties performance achievements risks, call, those cause known MDC’s website It of should expressed XXXX. the Any is is may or Regulation results actual be Before to Litigation Securities the that XX-Q, Private

Larry Mizel

diluted thank provide $X.XX quarter and on market some we thoughts results per as and point by current largely in today XX% first for increase XXXX, was Holdings margins conditions future of increase quarter expansion of the basis XXXX. share for MDC earnings our morning insight in a you joining the our the quarter, and home a of go over XX% housing XXX Good first the for sales reported XX.X%. into in our driven of substantial This company. us earnings per revenue give sales gross rise share over home year-over-year to

job an supply a delivering Our environment. excellent to quarter what chain homes and continues challenging be during teams did the

led to continued the communities. last also over the with in we've continuation high-end as experienced positive homes favorable came the we environment a provide pricing on higher a As and limited guidance basis at stated of combination quarter industry year-over-year home near our our in closed activity supply healthy deliveries average new demand rising of X,XXX, quarters. the on a of This order price XX% to healthy of the dynamic several for trended sales the

age desire equity ownership lives roots. large when put prime phase of and our broad much the behind chance home force in to being the whether of in buyers average was changing we X.X both to millennial reached down demand community dynamics, from quarter, with their As buyer or based pricing sold success. an to standpoint This continue per has per geographic a due higher build a month the became priority, homes a sales a driving family the population to

and the from high and cost into where from overall are these migration witnessed have choose. the more take business emergence and more areas Factors, we taxes, both where that of have companies they our by factor life by driving are MDC, to At while weighing trends benefiting markets our of individuals. operates affordability online buyers communities and we to purchase foreseeable positioned Another low we quality ongoing is as heavily in more by remote homes rates, in live freedom the including have believe company fixed affordable future. migration the low higher since given millennials opening on work this work appeal their that approximately support the innovative advantage forces are at capabilities employees of mortgage that in investing average continue the to from XX rate with nature long-term to new prices. financing faced markets for and see After to and the moved rate costs beginning We of has for with years points mortgage year. today that the the will are now demand of XXX being home historically basis perspective year markets home

rates on long-term Long-term, this coupled believe that in While attractive from solid that we demand historic the with factors a markets, have expect footing. in as the near-term lack in move may home is impact construction supply place new however, new to keep business a our our market adjust it current buyers of reality. natural mortgage perspective, a the are higher still this to

today's home that in is the relatively adjust rise to on stayed balance a leadership great note concurrent build absolute In rents of stable given gone while the of tailored bring. a MDC profile a has across costs cost to the product position rates, environment record to success may With changing interest rate a owning and track sheet, strong a has in team monthly whatever important with the addition, country. is seasoned in up to the relative and is it that rise the buyers,

through and leading the above the of which based ability housing Confidence our out taking to effectively adverse future risk borne our in price invest to operate business. yields company on the our continue approach fund X% is recent have dividend, the our cycle levels. We while in we industry by to long-term operations

is a For turn dividend, we who believe David, to healthy call in the believe more who value. housing the to over are investors will operations who our that this quarter. market viability details a like MDC seeking provide With those compelling I'd of on long-term and

David Mandarich

quarter Supply delivered close our our Thank to strong the I results improving you, in combat Larry. everyday these issues activity. faced and sell be ongoing finding and quarter delay us to both made and product were houses a first or operational pleased to there MDC of headwind strategies XXXX, be to issues. how We of able they quarter a times. in shortage profitability fourth were progress workarounds seems industry, cycle what consistent continue But from fairly of XXXX. terms our the with we the order in with but despite prevents first materially for challenges. in new chain that am teams implementing

not incorporating improvements generate we home current operating are chain environment Despite such building we forecast. across As divisions. continue any outstanding the our to in our supply margins to challenges, the

Orlando, Riverside As low margins posted County. strong to and particularly levels cost Vegas raise and divisions quarter demand the of buyer inventory strong prices included Las inflation, have in us ahead that allowed

during the of pace the witnessed of X.X, east were communities we pace during online mentioned, Larry broad X.X absorption quarter west strong indicative These with of region in and well of the a X.X. figures was posting demand of quarter. region continued of As an new based the as traffic mountain our pace home the as

Northern the Divisions have Our many with sales California. ended if of for higher included the communities. and at could we imposed for our during even quarter paces not best quarter in the limitations Portland that Denver, absorption

continued their to taking started most levels sales adjusting seem well, a we in little longer, Though to rising buyers the rate few move forward to have good We continue is be be our have since community to with months see and traffic a to higher purchase. process ago. environment that the as motivated noticed rates

seen we have change in very cancelation backlog. Additionally, already rates our among buyers in little

the general such in remain that that and outstrip particularly dynamics operate. continues supply, As to markets the senses we demand our healthy market

in priced to to to secured a our positioning of are in rates standpoint, in We and strategy efforts launch our Tennessee. substantially area recently remain agreed build markets the more a land diligent we’ve underwriting eventually building Nashville home pipeline acquire have ago, in focus is position land affordably great announced with of believe with assets of continued While has scenarios. in unclear we be settle that we We out, number poise transaction Nashville. acquisition where year and MDC the for a leadership one potential growth. all the already organic land combined rates our interest Jones Company believe our we a MDC it’s The a will this product on From position in success market has order investing

forward who detail Now this as like guidance. to on our call I’d as the more over turn Bob some Bob? provide looking results to quarter, will well

Bob Martin

Thanks, morning, David, good and everyone.

the first we During income homebuilding our the This gross billion, year-over-year as revenues, to which XX% was as XXX million. of increase generated increased $X.XX $XXX.X million quarter XX% by per $X.XX first share, or basis well improved to rose by a XX% first of quarter increase points income diluted margin representing from XXXX which the or home XXXX. our quarter, from operations from to million sales, Pretax from $XXX.X of XX.X%. driven net $XX sale home

$XX.X million first quarter in pre-tax XXXX. services to Our financial of income the decreased

several competition for the as in has refinance declined. mortgage indicated As increased we primary quarters, volumes have market have

more loans As have and closed locked, to gains historic result, a returned the sold, on levels.

federal to exercise home rate the over have decrease Northern of awards. as tax increases in quarter. and delivered to which range extended the increased to to our the price and of X% Our from the been to The during a quarter the the represented recognized of XX% XXXX windfall XX.X% the selling credits, due increase the the for California vesting year, in The our a efficient was for during This of from past and quarter XXXX of XX.X% to closings equity closings. as well energy which average markets. result delivered estimated price first X,XXX Nevada previously year-over-year our about exceeded homes increase We $XXX,XXX. the implemented quarter, a of upon in rate primarily mix increased homes X,XXX midpoint not was X,XXX shift tax

our of process to entirety labor to David constraints As final inspections. development supply and mentioned, headwind land disruptions home from production a remain the chain

for teams labor worsen While these basis. in Based or the the to they to a conditions significantly do issues an the we seeing are on term. what quarter, daily to on near not navigate seem remain we in not material during improve did expect obstacle our field,

quarter, for supply As as as schedules based on are year delivery the that chain well result, of labor projections a conditions. the remainder our and production current second the reflect

of quarter selling to X,XXX of second We the we price expect these between of X,XXX And XXXX and the and $XXX,XXX. home $XXX,XXX are between average currently anticipating deliveries for units. units be

addition, home full deliveries. of home year-over-year XX,XXX we margin and improved to by our between XXX In sales guidance are year Gross XX.X%. basis XX,XXX from points reiterating

margin by impairment and been nearly and driven increases been communities inventory labor partially the increased were sales have would of by quarter, and segments east year, largest which the XX%. the the of west each over from building our gross all across We Excluding having adjustment our with material have past from implemented year-over-year across nearly These improvements margin costs. increase. home price home sales recorded our our improved warranty during segments gross experienced offset

our on continue as continued on We of as to produce the pricing. from expect sales based gross gross and well margin our to margin home focus homes strong backlog,

taken material increases other on input the of costs our and well labor lumber XXXX outpaced first inflationary as rising costs. quarter price as during pressures Our from

home for from no to quarter XXXX second We are margin or expecting sales exceed impairments assuming gross the adjustments. XX% our warranty

expenses. for total general the from first dollar increased quarter XXXX quarter SG&A $XX.X administrative first driven increased Our expense the by million XXXX and

an overall increase year percentage of increased $XX.X revenues, Our a in as to marketing to XX a XXXX administrative higher primarily estimate the to quarter point that count million. of head sale as million increase salary revenues improvement revenues. these compensation $XX basis costs percentage from home due related expenses in points were leverage. expenses sale in basis We continue average expenses XX.X% resulting a and prior to resulted million. decreased SG&A drive well year-over-year be home and increased as we little operating year-over-year expenses, our administrative the bonus The expenses approximately improved increase general sale stock-based in home $XX XX from and changed for commission second quarter our accruals. will Despite currently as General the of

these driven controlling in costs, been have increase previously, the we successful net given orders billion As XX% current selling of to price. The our increased $X.XX by a we’ve environment. average value year-over-year noted dollar XX% in demand our

sales X.X monthly to month. absorption year-over-year per slightly Our per pace orders decreased community

moderate of better lots majority mix a number of we for to match continue the limits sale activity during time. We and released sales given lots of the number a our of We of first at through production. released to of communities the pricing pace our XXXX in the current limited quarter on

last somewhat slower actions the in was to of a As case year, January these and relative caused sales March, February. pace

quarter and Additionally, remained become during to We XX.X% communities end, We X.X% quarter cancellation relative backlog XXX saw had low relative as to new active two states at community the of XX country. orders. active the our during both ended to communities count the following from communities. as had migration rates quarter into gross Colorado quarter. Arizona active with California to XX the beginning increased most and from and Arizona for communities other of These number markets active comprise XX and affordable parts Florida. in highest of our benefit active XX closely in we

we the approximately and and close during made experience Texas when quarter, and open to it addition, to opened quarter, the we to challenging count communities of development forecast in when out. will strong that difficult is the always the at said, expect more This difficult communities year. the followed experience. as first to growth continue Community pleased demand. half our community during active is extended is predict current challenge will by count to by in XXX demand they Austin, precisely even flat In second community our we’re we the continued land With remain back environment times,

acquisition activity, This forecast growth XX% XXXX. percentage of the interactive prior a decrease follows XX, can as increase which from to seen lots the for total We from quarter first year approval quarters XXXX, be continue represented during X,XXX We lots XX. approved December the significant to of community March by several count December XXXX year-over-year which controlled double-digit quarter. in of land acquisition XX% XX,

development the we resulting during $XXX acquired addition, total In acquisition lots land million. quarter for of in spend the quarter X,XXX and

over assets transaction the near of the total strong XX.X%. million to ended $XXX operations the of that financial cash of Company we from opportunity acquisition Jones of of result will of remainder currently believe the that X,XXX quarter, a operations the as to equivalents position quarter expected have with and the $X.X and the expect our We quarter lot year the total ratio from cash building and in in cash of flow billion The supply. debt-to-capital We lots of generated well. $XXX.X million in to total the of majority addition the home the second generate The is We cash liquidity approximately over of during of Tennessee XXXX. close controlled end a

business industry leading model our continue adjusted risk We investments prioritize to capital and dividend. to land our fit allocation that to our

successful return March last of result approach our strategic increased of the over months year-over-year disciplined XX, points on of equity XX.X% to basis our our as initiatives, pretax XXX and execution a XXXX. allocation capital As to XX

We have achieve while maintain the my strongest been That homebuilding returns, in prepared sheet impressive concludes able one remarks. the continuing these to to balance industry. of

questions. open line for now up will We the

Operator

the [Operator first Yes, question Kim begin question-and-answer Evercore thank will Stephen ISI. with the we from And this session. you. Instructions] At time, comes

Stephen Kim

of very the the the guidance potential helpful. guess guess, on question lot first a Thanks had all guys. is the Yes. I I incentives. Thanks I much very commentary, and for issue

XQ, to close about table? any deliver I'm materialize So there maybe in the your might longer be sales that likelihood not to at talking margin rate I'm than the incentives need closing wasn't factoring little where gross that outlook, look you XQ a the homes but talking about the As that you in are Maybe in took the would locked. it home. expected you or

have and thing. in because later, And higher that sort to delivery Is of now was so, says, to customer you guidance? time back incorporated I a much any comes that have your the that the of rate

David Mandarich

XX% greater profit for about talked Well, I or gross we margins QX. think, the

I think from of the there that we time. that need for recognized time to thing is kind

estimate. pretty feel about good plus we So our XX%

Stephen Kim

an holistically the Well, that of encouraging. the the versus you think There But the that's and also know move about buying. that the bit, When incorporates part to that's market everything therefore would that area are that which same think more by I get rates level most strength concern. overall of may we've from token, is remain entry the it the trade to folks a sort going you them. skyrocketing. entry Rents based more seem implicitly, entry of to market, the you've a of level little is happen, up there maybe actually segment greater narrative need to the by down out pretty There's been hearing are – focusing there would that it on think level level. lot People strong. a is entry been can me reasons squeezed the

you level? at your for actions be is level if and And across in the anticipation level entry there you feel how environment? any at – As different their look taking rate that you points in – at price actions entry higher in do some positioned you look advance the might today weakening are disproportionate particular, taking of the you entry are the any

David Mandarich

just as seen think So, call for a position build And level we entry accepted order. that is affordable. product variety do product by can down question. very think, we a really us not We that that Steve, entry our be well, great well. it's the of believe I far we've I to so perform more consumers, move it a

in tends different attract, kind of to cases, that consumers. some So

certainly rates. programs interest things place, put rising in to of the we've limited said, That rates, from of do entry lock we're rising programs not it's to try We level. just to nature. minimize cognizant in place So the blow have that long-term that

think we manageable. So it's

innovating always affordability product our of as on are levels well. most to seasons product new We including achieve popular

considered So I think being that actively. is that's something

Stephen Kim

about particularly the idea customer. BTO helpful, that's helping move the Yes, down model, of a with

cost when builder? it the talking programs is is by nature, things shared? is clarify, of to that rate programs those about customer? Or the the borne it by borne lock Or Just you're and of

David Mandarich

It depends.

Sometimes we exclusively run it's where it customer. the

customer. and the half it run builder versus we'll it's where Sometimes half,

depends Just the we promotions that run. on given that the month and different

think it's both So I

Stephen Kim

very Great. That's helpful.

much very Thanks guys. Okay.

David Mandarich

thing. Good

Operator

the comes question Zelman you. with next and And Ivy from Thank Zelman Associates.

Ivy Zelman

Thank very you Congrats that good the been able afternoon. to results, and strong on have growth many community impressive count achieve. not

Just thinking do cycle, execution about more horizon? is say, less let's your market than, do at your strategy potentially the stage is new markets you you with this the a to think entering think now of the on footprint? investing existing new there enter And in risk

David Mandarich

the with was Ivy, – have in is going really morning. supply this just product think us. and for get the Yes, we've with able accepted. been fine Austin Good seasons that we We land widely opened products be are it David. to our that we markets up and to new

So the build really to us. order model terrific for pretty is

Ivy Zelman

recognizing going strongest like price reception. of you country supply invest Austin the your with is and us appreciation example. you so up in alternatively a more lots it an the with seems overall to the give right a respect that thinking would But challenging existing more for is market in in as as to about just builder much had perspective trades It floppy like Maybe because the how now market? And a issues, to the maybe continue just the newer are talk and products one to paying And the labor is footprint? lots. and good constraints secure about

David Mandarich

same say can Austin lot in What and burned coming is market of Ivy, lot answer of the are. I their burned they're and finding at we're of Yes. a basis have through we like – kind a land all some older of through that. the builders their

be current land popular… pretty of is we going our the is, order we to to And think builders. similar build really to basis our is so, And pretty think some model

Ivy Zelman

in does other another for that – existing footprint you mean and able that can look not more do. you're being to you'll So so be expanding opportunities

David Mandarich

few think, we excited this I last the about to opportunistic Well, years, Larry expanded markets is we at but I've and look and XX over a actually time the first include that pretty both always we're been Nashville.

about what good doing. pretty have feel we're add? to anything do we so, Bob, you And

Bob Martin

think, Yes, well. captured pretty it you've I

of year-over-year, very good keeping them you lot markets just have Austin, I Certainly, has jobs, very they're we're where think been appreciated then affordability you attracting in is and which individual think still getting they even in potential, terms sure again, these markets in I lot of markets recent including market we to to significantly There there Nashville. some are But are of if are larger next. a a more flow affordable though of more other we're really lot of looking some our make quarter the of cash you're getting and trying that market, strategy current appreciation. wow. markets relative in that newer the a and long-term into say, recognized that really gives at

the little love long-term the And diversifying bit well. we we think a helpful benefit from as very our potential. is operations So

Ivy Zelman

cost build just terms that. of inflation recognizing more that for you on in just the the to seen from one Thank model. we've And me, order

the You've for on across Difficulty] have everything cost an what us, cost seen XQ? increasing been annualized [Technical labor board, much quantify the overall increases pretty the through basis

David Mandarich

year-over-year we're per foot a on roughly, I XX% think I Yes, basis. guess, up probably

Ivy Zelman

you… that the particular – more And are Is skewed basket overall any more is little cost of versus a labor skewed to bit that part materials?

David Mandarich

I probably… think it's

Ivy Zelman

more inflation doing the fact In remainder for XXXX? of in

David Mandarich

I more material lumber. a think bit it's and on particularly the side little

our especially results. come lumber in of of through terms results. for in there the to year And remainder contributing get we're volatility the our going I some think it's how

in recent off you'll QX probably bit back little of more maybe QX. QX. spike and part in it then into coming the in through lumber start QX of the think a But I see will end

and the up of down for volatility the year. some be remainder will there So

Ivy Zelman

you. Oh, guys. good Thank luck

David Mandarich

Thank you.

Operator

next comes question Rehaut Thank from the Michael with Morgan. J.P. you. And

Unidentified Analyst

on from [indiscernible] Mike. Hi,

if how for last there was give referenced I talking new was if improvement earlier – were new and was you wondering there kind into wondering any times strategies implemented a of guys hindrance. but slowdowns municipal were and been those You on has about last issues you had color I arising. you quarter, And cycle further that big workarounds quarter issues front.

David Mandarich

Yes.

it's think then seems do quantify It to things like I hard we progress make thing. one see and any one pop in area up. you just other

be it things So, probably pop a list that laundry of would up across the country.

If sure of dealt presidents, list our you read long you mile one that ask things division a I'm of they a with. would of they've

I news process. sure we're permitting ahead good strategies getting the materials making including terms So, in ordering earlier the of is, our try in sure diligent active we're think it of make there's process to to that

permit helped come though are that that occurs. the a getting builder to Those making start sale given can markets. offset as sure the we're soon we not as that early our as things in even the surprises we're in out have So us spec as we're individual any process, so the ready day

Unidentified Analyst

if Was Thank sort Awesome. and demand And of is month sense slowdown? you month trended little quarter, your apologize of how kind earlier, orders covered any can there there or throughout bit and – give of a then pickup breakdown. and if maybe you you. a this the I by a secondly

David Mandarich

February. and indicated year. Yes, was remarks, prepared believe I January That's my to as last than similar in less a we March little

XX% again limitations increases to little about prices as price as just we the lower we activity during those the increased during lot we quarter bit But spring start that we happened note relative season, two similar the finish. to that implement releases through the on March in months. increases saw to is first last So were a go what I'd of first shy year. also from quarter,

Unidentified Analyst

Awesome, thank you guys.

Operator

go the from your Wells And Deepa line next live. Fargo. Raghavan, comes Please question Raghavan is ahead Ms. with you. Thank

Deepa Raghavan

for that. Thanks time. taking Hi. thanks for the and Good afternoon

pretty Sorry. since consummated Thanks for consummating will you soon. the the a Can be – you to M&A one in talk taking questions. pipeline

over. thinking that there outlooks not macro persistent the to then M&A? and pipeline are how're your supply to more given able this in will Can expect you chain Just weakening, every is And M&A we get be happen? builder issues, about

David Mandarich

homebuilder, This kind can The at last is transactions. of the time up, and I XX about checked looked build lot our and very fit in this Great into about of a David quality it and question. felt a order Jones ago, DNA but that we all see leader product last we've lot way. that our Nashville a of time years Company decade, both and would boxes packages one From good it over transaction our when The one answer to was to to came market. we this pretty

also complements existing we Jones at a team. of have You The great people really group note, Company that our

we've just team existing very into market. small Our the because gotten is

So us individuals it really forward. gives more holistic of group to move operations our

for the exciting company. I'm really So

Deepa Raghavan

All right. Great.

interest Any question. allocation share in buybacks. capital Another

well shareholders. buybacks come appreciated into to return of But value can create way pretty as you mix try share the here? Your are capital also obviously of dividends to

David Mandarich

it we That in have we some quite said, for some an Well, time. outstanding have time. used have authorization and not quite

as over coming dividend slated capital course that currently Company the lower side. including we of More QX. for have of past the allocated growing recently, know, always option it’s on here, of end us at valuations our land that’s well more the couple to close up leading years The the you as as however, towards assets including dividend, with Jones So especially an open industry

So opportunities a a attractive capital. for lot great of

Deepa Raghavan

play had I I than assuming at I’m color your on you All last And have least right. half given the you if any understand ask can closing quarter. help Quantitatively can the out just Bob, that. can of model, guide know, takes more QX BTO I that in half? weighted? puts scenarios I’d more us cadence. I talk appreciate and mean, the through second some second half, one. a mean, even margins visibility in probably anything you to If or is little a for bit the second maybe

Bob Martin

in think, variable side, Yes. QX. spike on about I come more the in through lumber that one already talked And recent the seeing lumber I

leave it’s still that’s one aware outside We plus a at of the think I’ll out of, for I demand. to QX. XX% thing great environment think that, be it solid there,

the a think got forward we into shot going So that half. margin second we’ve at good keeping

Deepa Raghavan

helpful. Thanks That’s Okay. very good much and luck.

Operator

And you. Wolfe Research. with from next Patterson Truman Thank the comes question

Paul Sadowski

drag was Paul new typically question Thanks, does new markets, actually, you these volume on the what then What the to do even, market And long morning. and Good would you a entrances? new then to for contributor take a I the following to scale? meaningful on Sadowski. break it to Ivy’s market wondering, need from be become all on now earnings how P&L? get right it’s

Bob Martin

think, in range be with that in plus historical terms us love The activity of work to in gets the assets we Jones based that the Company. independent I of The Nashville done I next Jones secure potentially us the acquisition already their think we’ve just market and closings. And year that for there So, XXX upon to to really

about good one pretty up feel that getting we scale. So, to

Jones new that’ll on In the Board got The change in naturally of terms coming QX. teams the in drag, with each Company of four relatively small we’ve late markets

the on And Jones process, know that to XX% a now. it’s to the will to lower I bit know give well we those a the second be allocate you’re XX% a it’ll that simply it have in up don’t aware right will have closings I be So call purchase take, Paul. moving price. And XXXX spectrum, margin material half of because the additional target range XXX we coming of a from in of drag, or

the about bit just margins in drag year, back XXX we’re a talking but it’ll the So then or of half closings so. just again, tee

Paul Sadowski

up things switch bit. a – I’m And Okay. little

has force one sales down for that the of costs elevated or about which and of homes destroyed Denver X,XXX annual there, to constrained clear because going from the Marshall XX% those start in preoccupied for hurdles, XX% in slow of of out your the You’ve cetera? to et labor kind going country. cetera, rebuild? Denver more to business forces production be that labor homes Denver will you, having from and When is maybe cause any the et either the market. is hiccups to Is got Fire insurance EPA And the

David Mandarich

I policy It’s the have to houses process. do the of a David. a they every answer up, it. EPA different site to that. they have one has and can insurance mean do clean I with those on to is what slow This what

some And affected that that ago. a we XX built that in over happened so it’s fact, it terrible years thing houses

kind into seeing but work to consumers what rent, looking a years of we’re be a So out going moving for system. going of into its us, of way one are is few some seeing process. to that buy it’s through houses those not to year moving people It’s lot we’re the apartments, and seeing a houses we’re take to for

Paul Sadowski

Okay.

noticeable So, Denver change expect in your period? any of we should of for kind business this temporary being because

David Mandarich

really we don’t Yes, it. see

Paul Sadowski

right. I Okay. appreciate All it. Great.

Operator

Securities. comes Jay with question next Wedbush McCanless the from And you. Thank

Jay McCanless

Hey, thanks for taking my questions.

and to First The customer for could mix Jones mix? MDCs about one, you Company customer how the that talk compares current

David Mandarich

I product think compatible fantastic very Jones our is order builds with in to build it a out strategy. and Nashville

with we I what So do. very think in is really business much line model their

Jay McCanless

up around move that of more color split? entry focused it level, any So is kind

David Mandarich

a They’re less than little it that. move say a we do. percentage we affordable. don’t probably XX% little necessarily our they exact same what up than would categorize focused way bit I the don’t percentage, I call the know it’s we’re more more because

Jay McCanless

Okay.

David Mandarich

to upside. [Indiscernible] move

Jay McCanless

you. homes off about quarters? XX% purchase and Paul He accounting margin probably the gross what to roll then got other said my question. then Thank a two And XX% three a with should after XXX to

David Mandarich

Yes.

close, closing you houses kind whether dependent all or I see occurs think less scheduled that, get not upon those naturally as of you quickly things. the into it’s XXXX, how of as

this point, that program So a that’s at right can now expect. roughly the we but uncertain little

Jay McCanless

Okay. taking Thanks my questions. for

Operator

Alex Thank Instructions] question Center. Housing the Research with [Operator Barron comes from And you. next

Alex Barron

through have or out clients Are the wait in the time days to great an in of close? on they your like lock gentlemen, XX ask locking to before rates? Yes. and extended they assisting build wanted quarter. at you I order in are rate they to model speaking you’re locking purchase the do given that till the how interest job rate uncertainty, Thanks, to with

David Mandarich

out standard advance. to programs have a can for is The it days but program we where XX do they year rolled out, up in

rate So consumer available upon that the we options to sensitivity environment. have of both depending the

Alex Barron

have pay are or incentive on So something own? you their they that that guys offering is is to an

David Mandarich

It’s both.

Sometimes they bear full costs. the

if something with we’re or it, we them help doing out promotion Sometimes will a that. like

a in our So tool toolbox.

Alex Barron

business backlog, that that is similar and much that it model of your margin pretty second year, pretty to the given have of your the also this assume you quarter half back which the be And covers the it. rest for year? for Got expecting okay you’re going is to

David Mandarich

a reasonable they’re in on a of and There’s lot our happens the a market trade course going strained. it’s lot that to assumption. base think I

probably don’t but estimate that to I So, it’s imply the risk there’s to at any that juncture. this not want most reasonable that,

Alex Barron

same there the the on? you just to uncertainty your able expenses the start on mean, and because mean, still in or the home be inflation of of that is starts lock to at time get time most some at not I you’re I point, to so lock of in the do

David Mandarich

Well, certain pricing. example, lumber I your not deliver they on you until the think for lumber, pack, are

various have We lock periods on lumber.

risk there’s out So there. that

and in backend think pool changes that and they’re upon with that same suppliers as work you contractually. When really endeavor. be go the regional potential people to through forward want well a sure in even subcontractors, you to with materials, them to labor they’re and local are much with trades, them own have the as dealing or in for it with their have is site. for profitable against upset we’d they you’re to you I still thing lock like as up On as your what pricing, their different make depending Last you issues moving

in margin like position, backlog of subcontractors. I we’re discussions into a good the the we pragmatic in a our half and our we’re make QX But feel in on standpoint, a always from nonetheless, year. pretty second with good So to think

Alex Barron

very If was one helpful. That Okay. I could squeeze more.

You any the that to I’m of cost that guys happen. you quantified migration the wondering the have sales of cost that phenomenon higher seeing lower talked if percentage way, states about in states. you’re guys from people

Bob Martin

the question think quite cost your I caught I don’t lower from the base. to higher cost base

Alex Barron

that’s moving California you Arizona quantified of that or percentage sales from Have of your kind happening, Yes. to from guys Texas thing, what people

David Mandarich

we unit, a David. example a town from single a have may the East people but clear Francisco family, San big either quantified would say really and family area to with moving single where think Bay three into a I house in it, out answer. don’t moved Bay is This the house carter a moving I of be attached garage or lot. a could

– some type interstate, some really people other but to but work phenomenon are be this have So what movement, a into have of affordable home been states, And might looking that lot add to to and from we’re people more Bob, seeing interesting. which moving you of that. it’s housing. are

Bob Martin

your hear I just to say, now. of didn’t state understand. I I going I the apologize. Yes. was Yes. questions part

it varies and in naturally state your cost state some think of by I states. higher

in state. could less X% might cost other be only lower of migration, of states, you markets. of so have You XX% out to be XX% you In north some from from your coming

range So talking upon state a of wide which about. you’re variability depending

Alex Barron

Well, right. luck of you. best All guys. Thank

Operator

to conclude any would session, does I closing as like to return question-and-answer floor you. Bob Martin Thank for it the And comments. to

Bob Martin

following the Thank again, of the our forward look announcement we all earnings. being on to call. speaking you you with QX And for

Operator

for The you. Thank now conference concluded. Thank today’s presentation. attending has you

disconnect your You may lines.

M.D.C. (MDC) 28 Apr 222022 Q1 Earnings call transcript